Q1 2021 Amdocs Ltd Earnings Call
After the speaker presentation there'll be the question answer session. That's the question during the session you will need to press star one on your telephone. Please be advised that today's conference is being recorded if you require any further assistance. Please press star Zero I would now like turn the conference over to your Speaker today, Matthew Smith head of Investor Relations. Please go ahead.
Thank you operator before we begin I would like to point out the during this call. We will discuss certain financial information that is not prepared in accordance with GAAP. The company's management uses this financial information in its internal analysis in order to exclude the effects of acquisitions and other significant items that may have a disproportionate effect in a particular period.
Accordingly management believes that isolating the effects of such events enables management and investors to consistently analyze the critical components and results of operations of the company's business and to have a meaningful comparisons of prior periods for more information regarding our use of non-GAAP financial measures, including reconciliations of these measures. We refer you to today's earnings.
Lease, which will also be finished with the SEC on form 6K also this call includes information that constitutes forward looking statements. Although we believe the expectations reflected in such forward looking statements are based upon reasonable assumptions, we can give no assurance that our expectations will be obtained or that any deviations will not be material such statements involve risks.
And uncertainties that may cause future results to differ from those anticipated. The risks include but are not limited to the effects of general economic conditions, the duration and severity of the COVID-19 pandemic and its impact on the global economy and such other risks as discussed in our earnings release today and the greater length in the company's filings with the Securities and Exchange Commission.
Including in our annual report on form 20-F for the fiscal year ended September 32020 filed on December 14, 2020, Amdocs may elect to update these forward looking statements at some point of the future. However, the company specifically disclaims any obligation to do so.
Participating on the call with me today are <unk>, President and Chief Executive Officer of Amdocs Management limited and tomorrow of rapid toward the game joint Chief financial and operating officer, and finally, a copy of today's prepared remarks will be posted on the Investor Relations section of Amdocs CS website. Following the conclusion of this call and without altering the type of the sugar.
Thank you, Matt and good afternoon to everyone joining us today on today's call.
I would like to please phase two day remarks by the filing to the previously announced I mentioned the open market, which we successfully completed on December 30 sales my comments on this call. We definitely felt of certain financial metrics on a pro forma basis when applicable in order to provide you with the sense of the underlying business.
Excluding the financial impact of the open market.
I'm pleased to report the strong quarter to start of.
Fiscal year 2021, among the highlights.
We the leaves out the record high revenue, which was up four 3% you will the U S reported in the above the midpoint of our guidance, even without the benefit of foreign currency movements with the best ever quarter in North America, and Europe, we maintained the high win rate, including significant new multiyear strategic.
Partnership agreement with T mobile USA, and we generate the robust normalized free cash flow of $385 million for the quarter.
During Q1, we focus on accelerating the rules by monetizing the strategic anchors, we've built to meet the customer requirements of the digital modernization <unk> the journey to the cloud and next generation Oss platform, it's accelerating the <unk> network servicing the net.
The lift balls as we are seeing some encouraging signs of market traction as we exited us on our strategy of.
First quarter sales momentum was strong it was.
Elected in a pro forma of 12 months backlog, which grew by a record amount of approximately $150 million sequentially and five 6% year over year. The mix of the New awards was also will balance of cost of product portfolio.
Also several of the new wins for openness by discharging and policy solutions.
Now let me provide you some point regarding the regional performance during Q1, beginning with North America, we didn't even though the local water is ramp up customer of activities to support the strategic investment the net dilution of <unk> customer experience solution.
The delivers on the cloud it's AT&T coincidence, we are accelerating the program to modernize the consumer mobility domain by including the deployment of <unk> monetization solution leveraging open its capabilities as we announced last quarter.
And so the Michigan opening of miles we are today delighted to announce the Amdocs has been selected to modernize and extend the as I said T. Mobile begin the transformation journey to the cloud by signing a new multiyear agreement, which further strengths our long term strategic partnership.
The start of the engagement do you want to implement the Amdocs one product portfolio to support the next generation communication and media services for its consumer the business customer. Additionally, I'm just we provide extended next generation hybrid cloud the duration in the form of from what you've met associates engagement Hello, Steve.
Mobile digital platform Covenant of automation of operation and continued support for T. Mobile assets, maybe just with complex integration process amongst some of some of the first quarter highlights chart sales selected Amdocs for a multiyear managed services agreement in support of its spectrum of mobile business. Additionally.
The people by the sooner our cloud based monetization platform to support the enterprise and wholesale services. Its next generation <unk> net.
So some of US North America, we are pleased with the Q1 sales momentum, which we believe reflect the strength of our net generation five G customer experience solution and the ability to accelerate our customer journey of the cloud.
Moving to Europe, we delivered a second straight quarter of record revenue.
Thank you Walt we continue to win new logos, such as wheat rate one of the largest mobile operators of Italy, which has chosen to deploy amdocs optimize to the public cloud to provide more than five day ready when a musician platform postpaid consumer and enterprise customers across all line of business and the management team into <unk>.
In the kitchen needlessly is the shift from physical to sort of baked in cards. These funds had been up instead of the by the global pandemic any translating to growing demand for the Amdocs cloud base using platform, which has already been deployed adopted by Telefonica in Brazil, and Chile, and which has recently chosen by simple mutual has to be deploy on micros.
Of the Shaw for its commercial launch of <unk> enabled devices like smart watches I don't know for laptops tablets and more.
We are also delighted to be growing our presence in Russia, where project total digital experience group has been selected by MTS is a consequence of the Scottish consultancy partner and it spreads to take each customer ecosystem and return of experience of the next level and to help identify you'd be the soybean the stream and local communities.
And just the media offering also continues to gain traction in eastern Europe, Ibiquity swanky footprint at a one telecom most of the book by reviewing its multiyear partnership with Avon or Watzke to provide transaction based offering Supreme studio content as well as of end to end content management.
Which includes marketing localization and processing services.
The outlook of Europe, we are focused on our project execution and on winning new business opportunities that we felt the life span a region of customer footprint for the long on the long of time.
Turning to the rest of the world.
Q1 revenue improved on a sequential basis among the highlights of the quarter. We continued to strengthen the relationship with long standing strategic customer of across the region.
The Good example, ease the Telefonica group, where we recently expanded our existing multiyear services agreement with mortgage stuff from.
And to modernize and accelerate its while incorporate the enterprise transformation. Additionally, we signed a multi line extension and expansion of our managed services agreement with Telefonica Movistar Chile to include the launch of our cloud based digital Esim solution, which I've mentioned before.
Two out of my regional performance I am pleased with our first quarter performance. Excluding open market. We are on track to deliver the full year of was on a pro forma basis in each of the three geographical regions in which we operating fee schedule to one or the.
Zone, we remind you the thank you much of the sequential trends may fluctuate across regions due to foreign currency movement, and sizing and timing of of project activities and other factors.
Our confidence in the outlook is supported by our recent sales momentum and the ability to monetize the strategic engines of growth, we have built to support our customer needs for digital modernization to enhance customer experience.
G. The journey to the cloud and of next generation Oss platform. This upsell of the innovative five G network services from the cloud era.
We are seeing strong interest and opened its five G charging of the policy solution policy solution, which naturally complements the multi play capabilities of charging platform and five G monetization of all the handling offerings. The integration of this technology the strengths of our market offering and help us to win new era.
All of these AT&T and several other service providers in the past months decent.
This will also include one of America's largest prepaid no contract wireless provider, which was recently selected Amdocs opened its five G policy management system. The only one AWS cloud to enable management and control of five G and all other wireless services, although the Europe, we've expanded our partnership.
With a one telecom most of it was and what the yield due to provide digital monetization using open in spite of the charging and policy products and services.
And the globe Telecom in the Philippines, we have successfully implemented at the end of the open it solution on the AWS cloud to support the go more growth fully digitized telephone brands.
Overall, we are pleased with the openness of recent progress and its proven ability to support the future challenging and policy needs of the wall service provider in the us.
Sell out of the <unk> investments.
To wrap up I'm pleased with the strong start we've made to the fiscal year, especially the amid the great uncertainty regarding the spread the severity of the COVID-19, pandemic, which continues to adversely affect the global economic outlook, we remain on track to deliver accelerated growth in fiscal 'twenty 'twenty one on it before.
Basis consistently of previous guidance and we continue to expect the stocks.
Strongest second half as we execute on our strategy and the ramp up recent customer awards, our confidence in the outlook is supported by the visibility of our backlog of proven ability to execute the accountability, we provide to our customers and our focused strategy, which we believe is aligned with.
The needs of the market.
With our commitment of profitability and disciplined use of cash we remain well placed with the Liberals total shown with them of almost 10% in fiscal 'twenty, one, including the slides the improved outlook.
For pro forma non-GAAP earnings per share of voice of the seven 5% at the midpoint of our new guidance range plus of dividend.
Finally, I would like to take a moment to thank our employees for supporting our social responsibility and the related activities, including a mission to the life connectivity and digital inclusion in the many communities in which we operate worldwide.
So a lot of the global pandemic People's ability to interact access services led and work has been essentially I'll focus of nimble, enabling digital inclusion of us of course, our offerings, but also extend to the communities from internet connectivity in the accessibility to digital literacy and advanced skill training.
For example, we are connecting salt scores in Kenya to the internet, giving the opportunity to more than 7000 children do use this window to the world, but operation with Safaricom Foundation in.
In addition to donated thousands of computers to under represented population. Many of the employees are also teaching different population out to access the internet, providing tailor made digital skills training and hedging future generation to become more of employer of Bill in the Tech Center and the Texas six of them. We are committed to the journey towards the <unk>.
Digital inclusion you will continue to say of societies will they need us the most.
With that let me turn the call tomorrow for the remarks.
Schoepke.
This of completed the divestiture of open market on December 31, 2020, our reported numbers for the income statement and cash flows in the first quarter of fiscal 2021 still include the per market and the reported balance sheet as of December 31, 2020, and the 12 months backlog metric already exclude the open market.
The other day provides with a sense of the underlying business trends of my comments today. When we started the certain financial metrics on a pro forma basis, which exclude the financial impact of open market from the current fiscal year and comparable fiscal year periods.
As of quarter revenue of the billion, an 86 million was above the midpoint of our guidance range of the day and 55 two of the 95.
Both of the reported and constant currency basis net.
Revenue include the positive impact from foreign currency fluctuations of approximately $5 million relative to the fourth fiscal quarter of 2020 and.
6 million relative to guidance.
On a year over year basis, our first quarter revenue grew 543% of reported and three 7% on constant currency.
Our first the third quarter non-GAAP operating margin was 17, 3% above the midpoint of our long term target range of $16 five to 17 of half and slightly better on the sequential and year ago basis.
Non-GAAP operating margin was consistent with our guidance that we will protect profitability. Despite the COVID-19 related challenges.
Below the operating line non-GAAP net interest and other expense was $5 $3 million in Q1, the mix of which includes interest expense related to our short term borrowings and 10 year bond and the impact of foreign currency fluctuations.
For forward looking purposes, we expect the foreign currency fluctuations will continue to impact on that GAAP net interest and other expense line in the range of the few million dollars on a quarterly basis.
If you looked at the non-GAAP EPS was the daughter and 16 sales from Q.
And above the high end of our guidance range all of the dollar of nine $2 15.
<unk>.
The non-GAAP effective tax rate of 16, 3% in the first fiscal quarter consistent with our annual target range of 13% to 17%.
Diluted GAAP EPS of $228 for the first fiscal quarter, well above the high end of our guidance range of 85 to 93 total.
The net gain of the dollar and 42 cents per diluted share rely on the divestiture of open market, which was not included in the original guidance for the quarter.
Free cash flow was $366 million in Q1.
This was comprised of cash flow from operations of approximately $416 million less 50 million in net capital expenditures of neither.
Free cash flow reflected the healthy level of cash collections with our customers and included the benefit of the new multiyear strategic agreement, we signed the T mobile doing the first fiscal quarter.
Normalized free cash flow was $385 million in the first fiscal quarter.
Please refer to the reconciliation table provided in our Q1 earnings release for an explanation of the difference between normalized and reported free cash flow in the quarter and for past periods.
DSO of 78 days decreased by 10 days deal of the Yale and increased by three days as compared to prior fiscal quarter.
The remind you the DSO may fluctuate from quarter to quarter.
As of December 31st total deferred revenue exceeded total unbilled receivables by $140 million.
This reflects the substantial increase in the total deferred revenue of $224 million of compared to the first fiscal quarter of 2020.
Slightly offset by an increase in total unbilled receivables of $10 million.
The increase the total deferred revenue is primarily related to the new T mobile agreement as well as many other new activities signed during Q1.
Changes in Unbilled receivable and total deferred revenue are primarily due to the timing of contract specific classrooms.
Moving forward you should expect these items to fluctuate from quarter to quarter in line with normal business activities.
Moving on our 12 month backlog was $3 billion 49 at the end of first fiscal quarter and reflect already the exclusion of open markets falling it's the vintages agile December 31.
On a pro forma basis, excluding the financial effects of open market at 12 months backlog had the record increase of approximately $150 million sequentially from the end of the prior quarter and was up roughly five 6% year over year.
As a reminder, we believe our 12 month backlog continues to serve as the good leading indicator of a forward looking revenue.
I am pleased to report another record quarter for managed services agreements.
Which comprised roughly 57% of total revenue.
This performance reflects higher the new Lake the adoption of our managed transformation model and continue the expansion of activities within existing customers.
To clarify open market business was not classified as managed services of therefore exit will not impact moving forward our revenue from managed services.
Our cash balance at the end of the first fiscal quarter was approximately $1 $5 billion, including aggregate borrowings of roughly $750 million and gross proceeds of roughly 300 million realized from the divestiture of open market.
Given our plans to use the majority of the open market consideration for accelerated share buyback in the next several months, we expect the cash balance to be lower at the end of fiscal Q2.
We remain comfortable with our balance sheet and believe that we have ample liquidity to support our ongoing business needs, while retaining the capacity to fund strategic growth investments as and when the right opportunities arise.
Additionally, we are committed to maintaining our investment grade ratings.
Now turning to the outlook the prevailing level of macroeconomic and business uncertainty surrounding the magnitude and duration of COVID-19 pandemic remains elevated.
The midpoint of our revenue guidance reflects what we consider to be the most likely outcome. The April the information we have today, but we cannot predict all possible scenarios and the remind you that our outlook may be impacted materially as our customers continue to elevate the strategic to the value of the strategic business priorities and future pace of investment.
Yeah.
We expect revenue for the second fiscal quarter of 2021 to deal with the in a range of the billion 15, two of 1 billion and 55.
Our Q2 revenue guidance anticipates of positive sequential impact of approximately $4 million from flow.
Foreign currency fluctuations.
Regarding the full fiscal year 2021, we expect full formal revenue growth of approximately three 5% to seven 5% year over year on a constant currency basis adjusting for open market.
This outlook is in line with up revenue guidance. So I expect the fulfillment revenue growth on the constant currency basis.
On a reported basis the Jacksonville Fort Hills is the 'twenty, one revenue outlook to reflect of the adjusted to the open market as of December 31, meaning that the open market is included in the first fiscal quarter numbers only.
We therefore expect reported full year revenue growth in the range of negative 3% to plus the three.
Three 7% the young as compared with the previous range of 4% to 8% you'll have the year there.
The adjusted revenue outlook on a reported basis anticipate the positive impact from foreign currency fluctuations of approximately one 2% year over year as compared to the positive impact of.
The <unk>, 5% previously.
As a reminder of our initial outlook at the beginning of fiscal 2021 had anticipated revenue growth of five to seven and half of the constant currency basis, including the contribution from open market.
Additionally, we expect the ramp up of customer activity to contribute an acceleration does any of the feel of the year revenue growth of the pull forward basis in the fiscal second half.
We expect all three geographical regions to deliver pro forma revenue growth in the full year fiscal 2021.
And the final point of further helping of modeling will remind you that the originally planned Fulton market fiscal 'twenty 'twenty, one annual revenues in the range of approximately $300 million, which represented more or less the same wholesales the yield so the rest of the company.
Open market generated roughly 75 percentage of its revenues from North America with Europe accounting for the balance.
Regarding the stability, we now anticipate quarterly non-GAAP operating margins to track roughly in line with high end of the.
The target range of 16 of half the 17, 5%.
This improvement relative to the levels of the past several quarters reflects the benefit of ongoing cost and efficiency improvements and the the vintage of open market full week operating margins were below the cope with the average tracking in the low double digits.
We remain focused on protecting off of stability, while maintaining strong execution during the ongoing pandemic and increasing R&D investments to support our customers and future growth strategy.
We expect the second fiscal quarter diluted non-GAAP EPS to be in the range of the door line nine cents to $1 50.
In our second fiscal quarter non-GAAP EPS guidance incorporates an expected average diluted share count of roughly 132 million shares.
We excluded the impact of incremental future share buyback activity during the second fiscal quarter as the lead.
A lot of activity will depend on market conditions.
Regarding the full year fiscal 'twenty 'twenty, one outlook, we expect non-GAAP diluted earnings per share growth of five 5% to 95% on a pro forma basis, which is slightly better than the original pro forma guidance of 5% to 9% we provided for the year.
And the reported basis, we expect of the live the full year.
Non-GAAP EPS growth of 48% you'll deal.
This outlook includes the impact of open market for the first quarter, only and compounded with the previous outlook of five 9% you'll deal with still included the open market for the full year of fiscal 'twenty and 'twenty one.
The extent of our non-GAAP effective tax rate to be within the annual target range of salespeople, 17% for the full fiscal year 'twenty 'twenty one.
I'm pleased to the fault, we are raising the outlook for normalized free cash flow for the year 2021 to approximately $800 million compared to 620 million previously the.
The new outlook is equivalent to approximately 8% of all of our Amdocs current market capitalization and represent the conversion rate.
Roughly 130% relative to expectations for non-GAAP net income.
As a reminder, we expect free cash flow the converse of the rate more on par with our expected non-GAAP net income over the long term.
And obviously with the line we are raising the outlook for reported free cash flow for fiscal year 2021 to approximately $600 million of compared to roughly $470 million previously.
On the Florida is free cash flow of Alto consistent based expenditures of roughly $140 million in relation to the development of our new campus in Israel.
$40 million of capital gains tax to be paid in relation to the divesture of open market.
And other items.
As previously stated we expect fiscal 'twenty 'twenty, one to be the peak year of capital expenditure for the new campus.
Additionally, the GAAP between expected free cash flow of normalized and reported basis has widened primarily due to the tax to be paid on the capital gain of open minded.
Additionally, we remind you the free cash flow of the second fiscal quarter is typically lower due to the timing of annual bonus payments.
During the first fiscal quarter, we repurchased $19 million the of our ordinary shares under our current authorization.
Regardless of our capital allocation plans for the rest of fiscal 'twenty 'twenty one the ex.
Two of them cash to shareholders in the form of a regular quarterly dividend the share repurchases.
Levels, roughly similar to that of fiscal Q1.
Subject to factors such as the status of COVID-19 pandemic outlook for M&A, the national markets and presenting industry conditions.
In addition to our regular quarterly share repurchases. We also plan to resolve them on Georgia. The net profit from open market the shareholders by way of our share repurchase program over the course of the next several months.
As of December 31st we had roughly $588 million of authorized capacity for share repurchase it with no state of the expiration date, which we will execute of the companies. This question going forward.
Although we are on track to deliver the accelerator, formerly of integral impulse book, the ability and better than expected free cash in fiscal 'twenty and 'twenty one of.
The combination of which supports the outlook for total shareholders' return of nearly 10%, including the seven 5% midpoint of our pro forma non-GAAP, earning per share growth guidance lots of these Indian.
And the final comment I'm proud to say that the Atlas has been recognized once again for its commitment to sustainability and corporate responsibility by earning in place of the prestigious S&P Dow Jones sustainability Index for North America for the second consecutive year.
I would like to John sugarcane, acknowledging our employees for their dedication commitment to best practices and the ability to work together with our partners and customers with.
Without which this achievement would not have been possible.
With that we can turn it back to the operating and be happy to take your questions.
Thank you as the reminder to ask a question you will need to press star one on your telephone to withdraw your question press. The pound key please limit yourself to one question and one follow up please stand by all of you compile the Q&A roster.
Our first question comes from Ashwin.
True backyard with Citi. You May proceed with your question.
Oh.
How should we be tomorrow.
For the quarter congratulations.
Hum.
I want to start off maybe with the question on T. Mobile of course, it's great that we stepped beyond any contractual uncertainty that might have existed there due to the merger, but does the new contract supersede the separate contracts that you've had before or is it basically incremental functionality.
Is that of Mo to eventually convert the full relationship to managed services deal just like on the sprint side.
Any thoughts on the evolution of this relationship.
Hi, Ashwin.
The contract covers many activities.
And as you mentioned the auction.
So we had met the services in the spring for you of Minnesota, The Metro Amdocs, the mobile and where the argument in terms of this activity is also of the magenta breath, but the overall of contract or agreement is comprised of four transformation to the new Amdocs platform.
The consumer business. It's also include the managed services and the new form of crowd of operation and also of activities that would support the the complex integration that the.
T mobile and sprint are going to.
To execute so overall I believe that the that you can see some pickup in the activity in during the probably the.
The next couple of for years and the and we believe that the there was the lots of activities for us to support the mobile in many of the was it. The two so overall, we are very positive of disagreement and we believe with the.
There's definitely can protect all of activity and actually in Haynesville activity leaves the strategic relationship that the reform, which is translated into this new agreement.
Got it got it.
And then the other question you know.
Actually a couple of clarifications.
Had good cash flow in the quarter I did not fully understand why that should be of benefit from the T. Mobile contract signing is did the prepay you for services.
So can you size that impact.
And then the clarification is on the net proceeds from open market for buyback.
No you don't normally put buyer.
Buyback in your forward expectation, but since you explicitly said in this case that you'll use it for buybacks are you putting that any of the EPS.
And the on the first point.
The collection this quarter has been very strong in general.
And the T. Mobile agreement also contributed by the fact that the was some payment related already to this new agreement.
And given the some initial milestone in this the wound to heal agreement.
But as the sales pleased with collections in general are not the not just the relates to Piedmont line.
Ask the second question on the buyback Youre, absolutely right that we are.
The expecting to take the majority of the necklace of innovation from the open market sales and put it into play in the next several months and by that we just don't want to get into the cyclicality of the including this already in the Q2 EPS guidance, but within the overall year guidance of earnings per share. It is.
And naturally you know just given how it works and the fact that the antibody that is impacting EPS. The weighted average share count anyway. Most of the impact of this activity will be in play in the second fiscal half of the year.
Understood. Thank.
Thank you congratulations again.
Thank you.
Thank you. Our next question comes from Tom Roderick with Stifel. You May proceed with your question.
If your line is on mute please UN mute.
The area of let's try that again.
So how should you had tomorrow. Thanks for thanks for taking my question. Congratulations on the nice start to the year. So I'd love to kind of go a little step further I'm just not just on T mobile, but you know.
The more broadly on what you're seeing.
With five G adoption of net new services, how carriers of thinking about that so you have a little bit of visibility into it and the north American market and in what what your customers are thinking talking about.
How is that translating into demand for amdocs demand for net new services and then <unk> can you kind of give a little bit of a of an offset in terms of how that impacts the historical NFC vision of yeah would love to hear if that's eating into that at all or if it's purely complementary. Thanks.
Okay. So so and then the actually.
And all of the firm I mean, it evolves towards a day to make the duration of networks are actually.
And we share with lots of activity and the end of it pretty much aligned with all of them make duration of social for it but back two five G.
The question all of our customer all of those America are now building the image of the nation five G possible, both for consumer and both for the and boastful way of business between.
We are offering actually addresses the whole variety of the system that gets us up all of these from the obviously from the ongoing system from catalog from the charging and rating in all of the amortization of activity and also in the network domain. So I think that the and everything broke basically is on the cloud.
So I think that if you look at our strategy, which actually to support the five G.
The slides the offering on the cloud is very much of line and we as ongoing the North America, which is leading the world in the five G. Adoption. So I think that was the right time, the right offering and every of every one of our customer right. Now you know So America investing five G.
Another appointment that is the and the other markets in the understand the ones the South Korea definitely leading the way in the five G. As well. We've also been very successful both the Korea telecom and the more recent win with the LG plus gaining a lot of experience and good references from this from.
These wins as well.
And back to you on this week from it so that we see a lot of demand for network offering.
As I say today, it's called a next generation of always says is the orchestration services integration everything cloud native and as I say that now the say the five gene next work.
So much capabilities for monetization the integration between now and BSS and Oss system of it is very relevant.
One of them really helpful and Tomorrow. This is probably still a little bit early and in flux given the world is changing so much right now.
But as you put together you know as you complete a new campus of beautiful new campus and in the middle of all of that the world is changing with respect of where employees can sit in the advancements of our virtual and work from home environment does any of what we've seen in the last year changed the way you think about the long term margin.
Sure and where your employees sit or do you expect that everyone will sort of be you know back in the office by the end of this year whenever the the when the time is right.
So in general we believe that working from the office provides a lot of advantages that the only thing when everybody is at home, but naturally we believe and felt the same before COVID-19.
Some kind of flexibility of the hybrid environment is advisable and good for employees and creating the goods out to remind you in January of 2020 before we all knew Covid is coming up and we actually moved to work one day a week from home globally.
And now with all the learnings and experiences the of course, the with this recent year enforced in the us with the pandemic, we realized that there is the an opportunity to build an hybrid model, where we give flexibilities to employees to work some day from all but naturally want them too.
Come back to the office now relative to timing that depends in each country in each region, sometimes even specifically the 50, what's the overall situation because of course, we were keeping of the first priority the.
The health and safety of our employees, so I cannot commit relative to timing when we are going back to this new normal situation.
The next thing is back to your point about the capital.
We've built a lot of flexibility in the design of thinking in this campus in terms of seating layout in terms of how much we can sublease to others because naturally of the build the catalyst that is dealt the staple decades will just flow laid the next deals too.
So we thought about all of those things of that and given the different landings in the last year. We've added of course different points of consideration to how we are thinking about seating layouts and things like that but but.
But I think the fact that we actually going to all of the Campbell gives us much more fixed the ability to decide how much space, we use versus sublease. These of V. The current situation, where we are.
The attendant ourselves.
Fantastic really good I appreciate it thank you guys.
Thanks, Tom.
Thank you. Our next question comes from Shaul Eyal with Oppenheimer. You May proceed with your question.
Thank you good afternoon shook it tomorrow and Matt Congrats on the ongoing healthy execution.
My first question is the vacuum so one on T mobile of of that expansion.
When you look at the number of subscribers that you of the dress several years ago when you compare that.
Maybe even contrast that with the recent the expansion.
Is there a significant number of subscribers addition, under the the the currently expanded the engagement.
Sure.
I don't think the the thing here is the number of subscribers is small the debt of the adoption of all day net.
Next Gen product portfolio.
And the fact that we are going to support the why the footprint in cloud and managed services rather than counting subscribers.
And the agreement is the taking got the to the next level. Both in terms of the this footprint as well as positioning us for fathers bulking of the strategic relationships that he's now enforced with this agreement.
Got it got it that's the that's it.
Fair enough.
And I have an additional question so now that the open market as it's fully divested.
Can you talk towards the about the open market contribution that you've had during fiscal 'twenty.
I know you might have the loopnet to being the bad onetime revenue give or take but wanted to see it.
If you could provide us with would like more color about it now that you had been there mirror.
Yeah, So as you kind of.
We're expecting roughly 300 billion, which is one ex of the consideration that we received in 2021 and it was one more of less than like the rest of the company. So we could take it back through 2020 number of roughly 280.
So when we look now of carving it out I think it's very of course kind of natural.
We try to get more color without all of it.
The form of numbers look like so people can understand the underlying business and the likes.
<unk>, which is the very positive in every quarter of doing 2021, since the reported numbers will be apples and oranges.
They continue to give pro forma color for people to understand the the trend that's going on so I hope that's going to be helpful.
Got it.
Got it.
All of them. Thank you so much congrats again.
Thank you Angela.
Thank you. Our next question comes from Jackson Ader with Jpmorgan you May proceed with your question.
Excellent thanks for taking my questions guys.
The first one is on open net.
The few charging five winter or I'm sorry.
<unk> five G wins announced in the last couple of quarters I'm just curious.
Were these deals in in the open net pipeline prior to the acquisition announcement of our being closed or these actually brand new deals debt.
You know that Amdocs has kind of sourced alongside open net.
And I think it's pretty much almost half and half half of diseases way of actually started the sales if I can start the where the openness to all of the stand alone company, but maybe deals, whereas the window will join Amdocs and we're able to take them to a lot of customers.
The worldwide.
I can tell you that now the actually the pickup that we see all of it this quarter and for the rest of the year is coming from menu pipeline. The do not exist in the in the open extend the loan pipeline.
Okay.
And then just another follow up on the on the T mobile announcement.
You guys have talked a lot in the past about kind of the the idea of that Amdocs and the Amdocs one platform and different things that you can do being layered on top of maybe some legacy systems.
And then ripping and replacing those legacy systems and kind of on the come in the next quarters or years.
Down the Pike is that is that of similar way that we should be thinking about this particular partnership.
And though and this is more like egg.
The idea is to take the full amdocs one platform.
Build it and then the.
Slowly migrate all of the consumer of all the consumer and the B too because of the middle of.
Of the mobile to this new parcel.
Okay. Thank.
Thank you.
Thank you. Our next question comes from will power. The Baird. You May proceed with your question.
Okay, great. Thanks, Yeah. Congratulations on the results I guess first question pertains, principally two to AT&T I guess, maybe to a degree to T mobile, but we just had a very.
Very big spectrum auction in the U S and I'd love to get kind of your perspective on.
How you would assess any potential risks from slower spending as that comes together of the carriers, particularly AT&T figures out how it went to deploy that spectrum.
Versus the medium and longer term opportunities for you all around the network planning.
With that spectrum by G opportunities et cetera, any any kind.
The early thoughts as to how that could impact the AT&T opportunity.
Actually I think it is the opposite it means that the customer all of them of 40 focus from five G deployment in order to deploy five G definitely the spectrum to be the net book, but the mass upgrade all of the BSA system. The charging of the policy system. So I think it's another evidence.
The all the North America carriers of committed to the five G journey and I think it's actually a good news for us because it's made of the wind down of obviously in the network. The must also upgrade the ITC send the BSS systems policy charging of everything that touches five G.
Okay, Yeah that makes sense, alright, and I just I also just wanted to ask tomorrow really nice growth in backlog of any other color you're able to share of that how much of that perhaps was related to the T mobile versus I don't know of other factors you might call out.
This was the.
Significant number but definitely if you look on the just even the the wins, we could announce who mentioned net many others that the we will not able to mention by name.
It was very strong growth signing quarter.
So I'm very pleased.
With many.
The first of all new logos, we mentioned for example, wind Tre and one of the largest operators in the insulin speaking from a lot of about the success in Italy.
The countries of such as several years ago, we didn't have any business day in and then we signed Vodafone, Italy is debt of Telecom Italia in the Sky, Italy and now in tray. So we are.
Very happy about the momentum.
North America, we gave a couple of examples Charleston, we gave the indication that we signed.
Another important deal in North America with the pay TV player that is moving into five G and we signed another prepaid the customer with the five G policy. So really it's been of great quarter, yet the mobile contributed definitely but many of those deals.
Okay. Thank you.
Okay.
Thank you and as a reminder to ask a question you'll need the press star one on your telephone. Our next question comes from Tobey Rosner with Barclays. You May proceed with your question.
Oh, Hi, this is Chris Reimer of Kathy. Thank you for taking my question.
Just looking at managed services and last year of being a record year and the strong performance this quarter.
What would you say were the driving force.
Behind the customers, who who choose the managed services.
I think the driving force is that actually managed services ease of Eva.
Moving and.
The new name is the is the crowds of duration or cloud managed services operation and the.
In the all of the new deals and T. Mobile is a good example, it's the the deal.
He aspects.
The pillows lot of day is the deployment of a new transformation to a new way of Amdocs, one platform, but the operate the new cloud environments in the cloud, but the services operation So I've seen that the.
The same value that we're able to prove in the managed services, which was on premise we can even even be have a bigger value in the cloud operation.
And I think giving the full accountability.
And that we have that's always the was the main differentiator from crossing the managed services. We see the same phenomenon of the same differentiation in the cloud Medicine, Minnesota Operation and this is why we expect this to.
To continue to growth.
Okay.
Can you talk about the traction you're seeing for Amdocs media.
Goodbye.
When we look at the end of the media space.
The mine when we enter these adjacent markets with so.
Three pronged strategy, whilst the take the media business, we acquired and importantly internationally as the beachhead there at the time to see non acquisition strategy was the ubiquity of mainly focus back then in North America, and we've had the major line of success in taking into many new logos, the new hope in Latin America, and APAC assessor.
The second the landlords the.
The the convergence that is happening between the connectivity and entertainment we've seen many communications service providers, adding entertainment services, whether it's the women may or launching launching over the top brands.
And we've seen the the success and the third layer, which is the the slower to evolve from our point of view is to penetrate the non.
Large media companies as they go directly to consumers. We are seeing this phenomenon is happening with the big guys, but we're also targeting a mid size of the media companies as they are moving forward in providing the best customer experience as the launching the brand to consumers.
And we all of their hoping that you can see that the part evolving as well from our point of view now of coffee passport, obviously, some challenges on everyone producing content. These days and given the more difficult in launching the new productions in the new content into the market.
But we believe the third this will be obviously all of our come.
From as soon as the pandemic of the.
The result of them and also new and more new content will be launched into the market, which is always positive for the media business.
Mhm, Okay. Thank you that's very helpful.
Thank you.
Thank you and I'm not showing any further questions. At this time I would now like to turn the call back over to Matthew Smith for any further remarks.
Yes. Thank you very much everyone for joining our call. This evening and for your interest in Amdocs. We look forward to hearing from you in the coming days. If you do have any additional questions. Please call us in the Investor Relations group and with that have a great evening and we'll finish the call.
Thank you ladies and gentlemen. This concludes today's conference call. Thank you for participating you may now disconnect.
Okay.
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Okay.
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